Temp Nation: The demise of "lifetime employment" in Japan

Wrenching change in the world's second largest economy. Now some are fighting back.

Editor's note: Temp Nation is a four-part series on the structural changes taking place in Japan, the world's second-largest economy. With the demise of Japan, Inc.'s lifetime employment policies, more than a third of the country's workforce is now underworked and underpaid. This series examines how some temps are starting to fight back. It also investigates the impact on foreign workers, and the political response to this growing social and economic problem.

NAGOYA, Japan — For decades, Japan's big firms were famous for their deal with employees: The corporation was a big family that looked after its workers for life. In return it expected total dedication.

That was the Japanese way, and part of the popular 1980s American media narrative on the rise of Japan, Inc.

It's no longer true. Instead, more than 17 million people in the world's second largest economy are now "irregular" workers, or temps, according to government statistics.

That's nearly 34 percent of the workforce, up from 25 percent in 1999 and just 15 percent in 1984.

Such workers give Japanese firms a more flexible workforce, helping them keep down costs and cope with globalization. But temps are paid less than full-timers, have fewer benefits and are cast off when times are tough.

The global downturn of 2008 made that painfully clear.

From the last quarter of 2008 to the autumn of 2009, Japan shed 440,000 "dispatch" worker jobs, according to government numbers (some have since been re-hired, or shifted to other categories of temp work.) Temps living in company-provided housing lost not only their jobs but their homes, too.

Now, fed-up temps — as well as small, independent unions — are beginning to push back. They say big Japanese firms are exploiting loopholes and weak enforcement of labor laws to maintain a low-cost workforce of "permatemps" with little or no job security. And increasingly, they're taking their cases to labor bureaus and courts.

Many such workers are surprisingly sympathetic to the need for Japanese firms to stay competitive. They just think things have gone too far.

"It's necessary to limit workers' rights to some extent so that companies can stay in business," said one 45-year-old former dispatch worker at Panasonic Ecosystems outside Nagoya. "The problem is, companies are ignoring the law and using dispatch workers indefinitely."

The worker did not want his name used because he is suing Panasonic for compensation after being let go in 2009, but still lives and works in a community of loyal Panasonic full-timers.

In interviews here in central Japan's manufacturing heartland, he and other former dispatch workers and union leaders described factories where hiring schemes have created something akin to a caste system.

At the top are permanent employees — two-thirds of the workforce — who still have the old, stereotypical deal of mutual loyalty with their companies.

The other third are temps, of bewildering variety. There are part-timers, hired directly by the firm but typically working other odd jobs to get by.

There are "dispatch" workers, who make as little as half the salary of permanent employees for the same work and hours. There are "subcontract" workers, who can only take instructions from the subcontract firm, not from bosses or colleagues at their actual workplace. There are Brazilian and Peruvian workers of Japanese descent, who get paid even less.

And, at the bottom, there are Chinese, Vietnamese and other foreign "trainees," who can make as little as 300 yen (about $3.25) an hour. They pay huge sums to labor brokers to work in Japan, aren't covered by labor laws in their first year of work, and suffer harsh financial penalties if they quit before their contracts are up.

The temp trend even affects foreign English teachers, who have watched firms slash salaries and benefits in the name of cost-cutting.

Broad effects

The implications of a rising temp workforce go far beyond Japan's factory floors. The trend has contributed to lower consumption, sharper inequality, falling wages and a resulting "working poor" problem. Average wages in Japan fell nearly 4 percent in 2009, the third straight year of losses, with real wages (accounting for deflation) falling nearly 3 percent.